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Construct a new contribution format income statement

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Reference no: EM132559131

Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows:

                                              Amount                              Percent of Sales

Sales                            $148,000                                 100%

Variable expenses                  59,200                               40%

Contribution margin                88,800                               60%

Fixed expenses                      24,000

Net operating income              $64,800

Required:

Question 1. What is the company's degree of operating leverage?

Question 2. Using the degree of operating leverage, estimate the impact on net operating income of a 16% increase in sales.

Question 3. Construct a new contribution format income statement for the company assuming a 16% increase in sales.

Reference no: EM132559131

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